Khaairuridian Bandung Assignment

8/13/2019 Khaairuridian Bandung Assignment

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Travel Agency Business Plan

Radax Adventure Team

Executive Summary

Virtually all companies that provide "hard" adventure activities appeal to a lowerincome client. Companies that appeal to a wealthier clientele generally provide"soft" adventure packages. Hard-adventure activities involve difficult physicalrequirements. They carry a higher level of risk than do "soft" activities. Softadventure activities may involve some physical exertion, however they involve a

low level of risk and can be engaged in by non-athletic people.

The company's target customers are high income (min. $75,000 for single person),health-conscious individuals interested in popular hard-adventure sports. These arelawyers, bankers, executives, doctors, etc. The major purchasers are located inurban areas within major United States cities. Our customers are more likely to bemarried. 51% are men and 49% are women.

In addition, more niche markets are evolving. Initially, it will be difficult tocompete with experienced providers, especially market leaders. However, RAT's

target market is an exploitable niche and our service is differentiated. RAT's targetmarket members will have similar activity interests, more disposable income andless sensitivity to price.

RAT will price its services at the top of the market. We will provide a luxuryservice with prestige value. Our prices will be out of reach for the majority ofadventure travelers. Service will be priced based upon luxury competitor pricesand the value added of our offering. Providers that offer luxury services similar toours do so at similar prices. We are competitively priced in the luxury market.Because we appeal to a smaller market, volume will be limited. However, we will

be able to capture a higher gross profit margin.


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An opportunity exists for two reasons:

1. Tourism is a growing industry (4% annually), and within the industryadventure travel is growing at 10%.

2. There are few providers of hard-adventure travel to upscale clients.

1.1 Objectives

Radax Adventure's objectives for the first three years of operation include:

To create a service-based company whose #1 mission is exceedingcustomers' expectations.

Capturing 25% market share of the high-end hard-adventure travel space. To develop a sustainable, profitable business. To achieve a 35% return rate of customers within the first three years.


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1.2 Mission

Radax Adventure's mission is to provide customers with the highest qualityoutdoor adventure. We exist to attract and maintain customers. When we adhere tothis maxim, everything else will fall into place.


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Company Summary

Radax Adventure, located in Kuala Lumpur, will offer hard-adventure trips to theupper end of the travel market. RAT will be concentrating on three activities,mountain biking, heli-skiing, and white-water adventures. RAT has chosen thesethree activities to allow the company to not be restricted by seasons, we will havetrips occurring through the year. While RAT's office is located in Eugene, it will beleading trips throughout the Malaysia, and the world.

RAT expects the first several months will be used to plan trips and train tripleaders. By the end of year one the trips should be in full swing and RAT will be

building a solid customer base.

2.1 Company Ownership

Radax Adventure will be a privately held Radax Corporation. Thomas, John Weis,and Lourdes will all hold equal number shares of RAT stock.

2.2 Start-up Summary

Radax Adventure's start-up costs include all the equipment needed for an office, aswell as the equipment needed for the mountain bike trips and white-water

adventures. Other costs will be marketing fees, website development, insuranceand a deposit for the office lease.

The office equipment will consist of four computer systems, DSL router, printer,CD-RW, CPU to be used as an internal server, phones, copier, fax machine andinstallation of DSL and two phone lines.

The equipment needed for the mountain bike trip will be a fleet of 15 bicycles, aself contained kitchen, shower and toilet system, and bicycle tools.

The equipment for the white-water adventures will include inflatable rafts (andother requisite related equipment), self contained kitchen set up, portable showerand toilet facilities, and lots of dry bags.


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The marketing costs are for the brochures and advertisements. RAT will also incurcosts in the development of our website. Lastly, insurance will be a large start-upexpense.

Start-up Funding

Start-up Expenses to Fund $2,400

Start-up Assets to Fund $57,600

Total Funding Required $60,000

Assets

Non-cash Assets from Start-up $13,000

Cash Requirements from Start-up $44,600Additional Cash Raised $0

Cash Balance on Starting Date $44,600

Total Assets $57,600

Liabilities and Capital

Liabilities

Current Borrowing $0

Long-term Liabilities $0

Accounts Payable (OutstandingBills)

$0

Other Current Liabilities (interest-free)

$0

Total Liabilities $0Capital

Planned Investment

Thomas $20,000

John Weis $20,000

Lourdes $20,000

Additional Investment Requirement $0


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Total Planned Investment $60,000

Loss at Start-up (Start-up Expenses) ($2,400)

Total Capital $57,600

Total Capital and Liabilities $57,600

Total Funding $60,000

Start-up

Requirements

Start-up Expenses

Legal $0

Stationery etc. $50

Brochures $100

Consultants $0

Insurance $500

Rent $450

Research andDevelopment

$400

Website Development $500

Office Equipment $400Expensed Equipment $0

Other $0

Total Start-up Expenses $2,400

Start-up Assets

Cash Required $44,600

Other Current Assets $0

Long-term Assets $13,000

Total Assets $57,600

Total Requirements $60,000


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Services

RAT will position itself as a niche service provider within the hard-adventuremarket. It will offer high-quality travel packages for extreme sporting trips. To

begin RAT will offer six trips: helicopter-skiing trips to Canada, India, and NewZealand, white-water rafting trips to New Zealand and Costa Rica, and a mountain

biking trip along the Great Divide from Montana to New Mexico.

The target market will be made up of young professionals who work and play hard.These people can afford to play expensively, and are willing to buy time in theform of our services. RAT willserve the hard-adventure niche market as a topquality, full-service provider. RAT defines quality by the unique aspects of theservices offered. Those aspects include booking group or custom trips, assistancewith passports, providing top-of-the-line equipment and supplies, and a superiorservice offering with access to better terrain, luxury accommodations,entertainment, celebrity exposure, and gourmet food.

The tours to be offered are as follows:

Mountain Biking: This event will take place on the Great Divide trail fromMontana to New Mexico and is designed for the serious biker thatappreciates a few of life's comforts along the trail. Showers and gourmetmeals will be provided, along with entertainment. All excursions willmaintain a staff to client ratio of 1:2.

A comprehensive map system has been created by Adventure Cycling and iscurrently available for purchase. The map clearly indicates the route, places tocamp, stores for food and laundromats. Leadership training for the guides will bedeveloped in-house using some outside material. There are many similar

organizations that will be good sources of information.

The products needed for this trip are for the most part already manufactured. Oneitem that needs to be designed and built is a privacy compartment for the solarshower. This will be designed by Thomasand manufactured in-house. A


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cookbook collection of simple recipes, including some personal favorites, will alsobe assembled. Professional cooks will be provided, and flown in if necessary.

Heli-skiing: Helicopter skiing has become a popular alternative to resortskiing. It offers uncrowded access to the best terrain. For those who like toget off the beaten path heli-skiing is for them. RAT has planned annual andcustom trips to three destinations. Everything will be taken care of for thecustomer. Transportation, lodging, transfers and skiing is included in the

package. Although our trips are planned at peak ski seasons, mother naturecannot be predicted. In the event that the weather is too treacherous to skithe trip will be postponed. An inhouse travel consultant will accompanyeach group and take care of all check-in and transfer issues.

RAT will not send clients to places we ourselves would not go. All service

providers will be top-notch professionals with accomplished backgrounds. Theywill be medically trained, and evaluated for knowledge and ability to ensure safetyand high-quality service. If they fail, at any time, to meet our rigid standards ofquality, they will not be used. If quality falls, another provider will replace them.These activities take place outside of the United States and therefore we will hirelocal guides to accompany our professional guides and service providers.

White-water Sports: New Zealand and Costa Rica were chosen for theseten day long hard-adventure excursions. There can be a maximum of ten

people per group. Annual trips will be planned to each location, but for large

enough private groups, custom trips can be planed. As with the heli-skiingtrips, local guides will be used in addition to our own. The abroad trips will

be a cooperative effort in-house, as well as local guides in the host countries.The choice to seek outside consulting for the trips abroad is due to eachcountries different legal and regulatory climate. The potential subcontractorsand guides are individuals currently in the industry in their respectivecountries.


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Market Analysis Summary

Travel industry is an upward growth industry. There are several reasons for thisincrease. First, a relative healthy domestic economy over the last several years andthe devaluation of currency in other regions has made travel less expensive forAsian. residents. Pleasure travel has increased by 3.2% in 1999 and is predicted togrow 2.0% in 2000. Second, the healthy economy has increased business, which inturn boosted domestic business travel 4.8% in 1999 with an estimated increase of

3.6% in 2000.

Adventure travel is a growing segment of the travel industry. One theory of therecent increase in extreme sports has to do with the strong competitive nature ofyounger Asians. Statistics show that 8,000 Asian. companies (that offer adventure

packages) generated $7 billion in 1999. There also has been a 66% increase inexecutive participation between 1996 and 2000 (or an increase of 2,000

participants)(La Franco, Robert.Forbes,Feb 9, 1998 v161 n3 p168(3)).

Some quick facts:

Adventure travelers: More than 50% of the Asian. adult travelingpopulation, or 147 million people, have taken an adventure trip in theirlifetime (98 million in the past five years). Thirty-one million adults haveengaged in hard-adventure activities like white-water rafting, scuba divingand mountain biking. An additional 25 million engaged in both a hard- andsoft-adventure activity. Six-percent of those who participated in adventuretrips spent more than $2,500.

Activities most commonly participated in during adventure vacations:camping (85%), hiking (74%), skiing (51%), snorkeling or scuba diving(30%), sailing (26%), kayaking or white-water rafting (24%), and bikingtrips (24%).

Biking vacations: Twenty-seven million travelers with customers that tend tobe young and affluent. Ages 18-34 and one-fourth are from household'sw/annual income of $75,000 or above.


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4.1 Market Segmentation:-

RAT's target customers are high income (min. $75,000 for single person), health-conscious individuals interested in popular hard-adventure sports such as skiing,white-water sports and mountain biking. The major purchasers are located in urbanareas within these Asianscities.

Customer Location (within the Asian Country):

1. Kuala Lumpur2. Singapore3. Bangkok4.

Jakarta5. Filipina

6. Brunei7. Vietnam8. Laos9. Cambodia10.Hong Kong

Hard-adventure travelers are more likely to be men. Therefore, RAT's primarytarget market for hard-adventure sports is men between the ages of 18-34.

However an increasing number of hard-adventure travelers are women (somestatistics suggest that women comprise 49% of the hard-adventure market). Men,on average, spend more than women on their adventure travels.

Customers will be reached through traditional marketing communication methods.Information has been located relating to specific profiles of both hard- and soft-adventure travelers, where they live, work, what they do, etc. Research suggeststhat many of our target customers, and travelers in general, are Internet savvy. Assuch, the Internet will serve as an appropriate and effective medium ofcommunication. Many adventure travelers purchase over the Internet or buythrough travel agents. Purchase decisions are influenced by the amount ofdisposable income held, family issues, and the economy of a given year.


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RAT will be targeting two specific groups:

1. High-income health-conscious individuals.2. Young, active "trustafarians."

The common elements between these two groups are money and a love foradventures. Group one has a lot of money from income that they earn. Group twohas a lot of disposable income because the money was given to them, typically bymembers of their family. The second group, the trustafarians, is a very small grouprelative to the first group.

Market Analysis

Year 1 Year 2 Year 3 Year 4 Year 5

Potential Customers Growth CAGR

High-income Health-conscious Individuals

12% 1,300,000 1,456,000 1,630,720 1,826,406 2,045,575 12.00%

Young, Active Trustafarians 5% 500,000 525,000 551,250 578,813 607,754 5.00%

Other 0% 0 0 0 0 0 0.00%

Total 10.19% 1,800,000 1,981,000 2,181,970 2,405,219 2,653,329 10.19%


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4.2 Target Market Segment Strategy:-

RAT will promote/position itself as a differentiated provider of luxury hard-adventure travel, and will price accordingly within the chosen service niche.

RAT is targeting this special population for several reasons:

1. This segment, up until now, has been underserved.2. This market segment traditionally spends a fair amount of money on

adventure trips.3. This target segment seems to be willing to pay a premium for a top-shelf

adventure excursion.

Methods of communication will include direct mail, magazine advertising,

personal selling and WWW presence. Continuous magazine advertising will becostly. Initially the use of direct mail, and personal selling will be employed. Thesemethods of communication will be tailored to reach our target segment.

4.3 Service Business Analysis:-

As operations progress, RAT will continue to measure our progress relative tocompetitors and to the growth of the market(s) in which we operate. Though the

primary target market has been defined, there may be new possibilities to serveadditional segments. As the product is defined, and the strategy differentiation is

defined based on competitive strengths, RAT will be better able to determinewhether adjustments in positioning are necessary. Access to important informationconcerning the market, competitors, etc., is available. However it is not free. Forthe purposes of this project, we feel it is unnecessary to incur additional expense.

The marketing strategy will be to develop long-term relationships with customers.We will keep a database from which to obtain important demographic and

psychographic information. As the business becomes profitable, plans will beimplemented to expand. There is virtually no limit to the number and variety oftrips RAT can provide. Trips can take place on every continent and in most

countries. The goal is to establish RAT as an international provider of top-of-the-line hard-adventure travel.


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4.3.1 Competition and Buying Patterns:-

Strengths and weaknesses of the competitors:

The competitors in this market are of two primary types. First there is the

adventure provider who specializes in a single type of hard-adventure activity suchas white-water rafting. They typically serve clients who purchase trips for less than$2,000 (and closer to the mean purchase price of around $900). Their strength istheir expertise in a given sport. Their weakness is that they provide anundifferentiated product in a competitive market. In addition, they do not have theresources, ability or desire to target and/or accommodate a customer demandingmore accommodation and a more luxury/adventure-oriented service.

Companies that offer higher-priced, more luxurious packages generally provide a

"soft" adventure. The activities are more along the lines of sightseeing and low-riskalternatives. The advantages these companies have include established reputations,extensive knowledge of the industry, and key personnel and management. Somehave been in operation for more than twenty years. They are familiar with localservice providers and have established strategic relationships.

Disadvantages to us:

It will be difficult to price ourselves competitively when we first enter themarket.

Many of RAT's activities are seasonal. Recurring revenue will depend uponsuccessful trips in various regions of the world. For example, ski trips willend in April in South Korea. RAT will then have to move ski operations to

places like in New South Wales, Australia . The weather for a given year is hard to predict. Poor conditions will threaten

the success of trips. Unforeseen occurrences such as inadequate snowfallcould effect the viability of activities such as skiing and white-water sports.

Closely related competitors:

Abercrombie & Kent: A well-established, international travel provider. Tzon),trekking, sightseeing, etc. However they do offer a "Connoisseur" line of packages.These are generally priced starting from $4,000-7,000. Some of their packagesinclude white-water activities and hiking, however most are touring packages.

Competing or substitute products:


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There are many activities and types of travel available to people contemplating avacation. Theme parks, motorhome trips, and cruises are just a few. Substitutescould include less expensive, self-planned trips, trips geared towards soft-travel,adventure trips involving hunting or fishing as primary activities, or exclusiveadventure trips such as personal submarine tours of the Titanic or a trip around theworld in a Leer Jet. Many activities that take place outside and involve some levelof risk could be seen as hard-adventure competition.

Another alternative is to do nothing. Consumers do not have to vacation. They mayopt to spend the money they would have otherwise spent on a vacation onsomething else.

Strategy and Implementation Summary

Radax Adventure will be going after the upper-end of the hard-adventuremarket. This market up until now has been underserved, there are hard-adventuretour companies, but none that are catering to the high-end spectrum. With theadventuring traveling industry steadily increasing, RAT sees a unique opportunity.

RAT's main objective in its marketing and sales activity is to make the impressionon prospective customers that RAT offers a higher level of service relative to anyother provider of hard-adventure tours. This will be communicated through all ofthe different media that we use. If RAT can make the impression that our trips aretruly different and superior, then our research indicates that there will be steadydemand.

Once RAT has clients signed up and participating on our trips, it will rely onsuperior customer attention and service to impress and retain clients for futuretrips. Developing long-term relationships will be the key to steady growth.


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5.1 Competitive Edge :-

The competitive edge in our services is the access we provide to popular "hard"adventure sports without the budget constraint of typical travelers. That is, mosttravelers are looking to spend less than "hard" adventure sports without the budgetconstraint of typical travelers. The majority of providers cater to these people.Radax Adventure intends to use the same service providers but provide moreexclusive trips. Accommodations will be primarily in small luxury hotels andresorts. Meals will be exceptional, more like gourmet cuisine. In addition, theadventure activities will be better than average because the clients have moremoney. They won't get stuck with people they don't like; they will get access to the

best terrain, sections of rivers, etc. RAT's activities are very popular. RAT's targetmarket has no problem spending $4,000 per week on heli-skiing. Moreover, theygenerally make this type of activity an annual event.

5.2 Sales Strategy :-

The sales strategy is to create long-term relationships with customers throughsuperior service. The intent is to initially target the primary customer group. Thisgroup has been defined as persons who have purchased, or are likely to purchase, a"hard-adventure" vacation for over $2,500.

The trips planned are designed with the wealthy adventure traveler in mind. Latermarketing efforts may include trips geared towards corporate clients, Eco-tourismor hard-adventure trips for people who want to spend less money. Target customerswill be identified through standard research methods. There are a number of

publications available that contain profiles of Adventure travelers.

Methods by which we will contact customers will depend on results ofmarketing/sales research. We will likely use trade or special interest magazines,direct mail, Web-based communication, and personal selling. In addition printedmaterials will be made available to customers through travel agencies that cater tothe adventure target market. Initially, service will be introduced regionally, and

possibly nationally. Sales will be extended into the global market within a fewyears of operation.

Our services are seasonal. Recurring revenue will be dependent upon successfultrips involving a variety of activities offered year-round. We hope to promote out


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Sales Forecast

Year 1 Year 2 Year 3

Sales

Heli-skiing $360,000 $500,000 $570,000

White-water Rafting $140,000 $260,000 $310,000

Mountain Biking $100,000 $200,000 $240,000

Other $0 $0 $0

Total Sales $600,000 $960,000 $1,120,000

Direct Cost of Sales Year 1 Year 2 Year 3

Heli-skiing $0 $0 $0

White-water Rafting $40,000 $70,000 $78,000

Mountain Biking $28,000 $50,000 $64,000Other $0 $0 $0

Subtotal Direct Cost of Sales $68,000 $120,000 $142,000

.

5.3 Milestones:-

Radax Adventure will have several milestones early on:

1. Business plan completion. This will serve as a roadmap for theorganization. While RAT does not need a business plan to raise capital, itwill be an indispensable tool for the ongoing performance and improvementof the company.

2. Set up the office. This will be the main/only office located in Eugene, OR.3. Develop the training program. This program will be used to train the leaders

of our trips.


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4. Completion of first trip.5. Completion of twentieth trip.

Milestones

Milestone Start Date End Date Budget Manager Department

Business Plan Completion 1/1/2001 1/21/2001 $0 Jordan Marketing

Office Set-up 1/1/2001 2/1/2001 $0 John Department

Develop Leadership TrainingProgram

2/1/2001 3/1/2001 $0 Jordan Department

Completion of First Trip 4/1/2001 5/1/2001 $0 Loren Department

Completion of 20th Trip 4/1/2002 5/1/2002 $0 Loren Department

Totals $0


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Management Summary

The three founders of RAT are Thomas, John and Lourdes. They will occupymanagement roles within RAT, as well as being the specialist in at least one typeof hard-adventure activity and being responsible for the management and operationof key functional areas.

Thomas, VP, Corporate Council, Business Development, and MountainBiking Activity Supervisor: Thomas received his Bachelor of Arts in philosophyfrom Queensland University Australia,. While there, he was president of theBrisbane and Murdoch Cycling Club and Team for two years. He completed hisMaster of Business Management/Doctor of Jurisprudence, joint degree program at

Willamette University where he has served as the secretary of the EnvironmentalLaw Society, and chairperson for the Willamette University Public Interest LawProject (WUPILP). As chairperson, Thomas supervised twenty-five staff membersand raised $14,000. Thomas has also managed a bicycle shop for two years.Following graduate school, Thomas worked for Counterclaim.com where Thomasdid business development, organizational development, and other managementactivities. He is responsible for all logistics on the mountain bike trips.

Thomassexpertise in mountain bike trip logistics comes from years of cycletouring. Thomas has cycled across the country and around the Upper Peninsula of

Michigan and Vermont. Thomas has also done a great deal of backpacking,backcountry hiking and snowshoeing. He has served as a consultant on many long-distance bicycle tours in the United States and abroad. In addition to his role aslogistical planner, Thomas will be responsible for part-manufacturing for themountain bike trips as he has manufacturing expertise from several years of designand improvement experience with outdoor gear.

Thomassextra curricular activities are based upon his love for the outdoors. Hehas been a competitive cyclist and runner for the last five years. He competes in

cycling road races, endurance mountain bike races, and road/trail running races upto half-marathons. His current favorite activity is the duathlon or run/bike/runevents. He would like to combine his experience and education with his love forthe outdoors. The RAT business concept is a reflection of this desire.


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John Weis, VP, Human Resource Manager/Corporate Trainer, and Ski-tripCoordinator: John graduated with two Bachelor of Science Degrees, one incorporate and industrial fitness and the other in occupational safety, fromUniversiti Utara Malaysia in 1991. John completed her MBA work at yayasanPerak Graduate School of Management in 1998. She has six years experience inthe field of safety. After Yayasan Perak John worked at Nike as a human resourcespecialist. Her interests include scuba diving and downhill skiing. John hascompeted in track & field as well as in horse shows and barrel racing. Along withher interest in sports, John has a variety of experience with business and pleasuretravel. John will supervise the training of our leaders.

Lourdes, Marketing Manager and White-water Adventure Coordinator:Lourdes is twenty-seven years old. He received his Bachelor degree in psychologyfrom Western College and graduated Magna cum Laude. He will complete his

Master of Business Administration degree (with an emphasis in marketing) in1998. Following graduate school, Lourdes worked for Burley Cooperative as amarketing manager. Lourdes has been active in athletics for twenty-years. He

played football at the grade school, high school and college level, as well asbasketball, track and field, and competition karate. He is an avid outdoorsman witha passion for water sports, skiing, hiking, hunting and fishing. He has recentlytaken up kayaking. Lourdes gained self-employment and management experienceas an independent contractor for the Union Pacific Railroad. He has also managedand operated a small restaurant. He has always planned to own his own businessand realized, while working independently, that he needed the knowledge of

business management that an MBA program could provide.

Though the founding members intend to take an active role in the operation ofRAT, additional management will be sought out. RAT is open to assistance fromexperienced managers associated with venture capital providers.


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6.1 Personnel Plan:-

The following table shows the personnel plan for RAT.

Personnel Plan


Thomas $30,000 $30,000 $30,000

John Weis $30,000 $30,000 $30,000

Lourdes $30,000 $30,000 $30,000

Mountain Bike Trip Personnel $70,000 $150,000 $170,000

Heli-skiing Personnel $120,000 $170,000 $200,000

White-water AdventurePersonnel

$70,000 $125,000 $155,000

Secretary $18,000 $0 $0

Total People 4 19 19Total Payroll $368,000 $535,000 $615,000


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Financial Plan

The following subtopics will provide more financial information.

7.1 Projected Cash Flow:-

The following chart and table indicates projected cash flow.

Pro Forma Cash Flow


Cash Received

Cash from Operations

Cash Sales $600,000 $960,000 $1,120,000

Subtotal Cash from Operations $600,000 $960,000 $1,120,000

Additional Cash ReceivedSales Tax, VAT, HST/GST Received $0 $0 $0

New Current Borrowing $0 $0 $0

New Other Liabilities (interest-free) $0 $0 $0

New Long-term Liabilities $0 $0 $0

Sales of Other Current Assets $0 $0 $0

Sales of Long-term Assets $0 $0 $0


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New Investment Received $0 $0 $0

Subtotal Cash Received $600,000 $960,000 $1,120,000

Expenditures Year 1 Year 2 Year 3

Expenditures from Operations

Cash Spending $368,000 $535,000 $615,000

Bill Payments $168,145 $245,468 $305,745

Subtotal Spent on Operations $536,145 $780,468 $920,745

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0

Principal Repayment of CurrentBorrowing

$0 $0 $0

Other Liabilities Principal Repayment $0 $0 $0

Long-term Liabilities PrincipalRepayment

$0 $0 $0

Purchase Other Current Assets $0 $0 $0

Purchase Long-term Assets $0 $0 $0

Dividends $0 $0 $0

Subtotal Cash Spent $536,145 $780,468 $920,745

Net Cash Flow $63,855 $179,532 $199,255

Cash Balance $108,455 $287,987 $487,243

General Assumptions


Plan Month 1 2 3

Current Interest Rate 10.00% 10.00% 10.00%

Long-term InterestRate

10.00% 10.00% 10.00%

Tax Rate 25.42% 25.00% 25.42%

Other 0 0 0


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7.3Break-even Analysis:-

This Break-even Analysis table and chart, below, project the figures for monthlysales break even.

Break-even Analysis

Monthly Revenue Break-even

$43,114

Assumptions:

Average Percent VariableCost

11%

Estimated Monthly FixedCost

$38,228


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7.4 Projected Profit and Loss:-

The following table indicates the projected profit and loss.


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Pro Forma Profit and Loss


Sales $600,000 $960,000 $1,120,000

Direct Cost of Sales $68,000 $120,000 $142,000Other $0 $0 $0

Total Cost of Sales $68,000 $120,000 $142,000

Gross Margin $532,000 $840,000 $978,000

Gross Margin % 88.67% 87.50% 87.32%

Expenses

Payroll $368,000 $535,000 $615,000


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Sales and Marketing and OtherExpenses

$21,000 $0 $0

Depreciation $4,332 $4,332 $4,332

Leased Equipment $0 $0 $0

Utilities $0 $0 $0

Insurance $4,800 $4,800 $4,800

Rent $5,400 $5,400 $5,400

Payroll Taxes $55,200 $80,250 $92,250

Other $0 $0 $0

Total Operating Expenses $458,732 $629,782 $721,782

Profit Before Interest and Taxes $73,268 $210,218 $256,218

EBITDA $77,600 $214,550 $260,550

Interest Expense $0 $0 $0

Taxes Incurred $17,825 $52,555 $65,122

Net Profit $55,443 $157,664 $191,096

Net Profit/Sales 9.24% 16.42% 17.06%

7.5 Projected Balance Sheet:-

Pro Forma Balance Sheet


Assets

Current Assets

Cash $108,455 $287,987 $487,243

Other Current Assets $0 $0 $0

Total Current Assets $108,455 $287,987 $487,243

Long-term Assets

Long-term Assets $13,000 $13,000 $13,000Accumulated Depreciation $4,332 $8,664 $12,996

Total Long-term Assets $8,668 $4,336 $4

Total Assets $117,123 $292,323 $487,247

Liabilities and Capital Year 1 Year 2 Year 3

Current Liabilities

Accounts Payable $4,080 $21,617 $25,444

Current Borrowing $0 $0 $0

Other Current Liabilities $0 $0 $0

Subtotal Current Liabilities $4,080 $21,617 $25,444

Long-term Liabilities $0 $0 $0

Total Liabilities $4,080 $21,617 $25,444

Business ratios for the years of this plan are shownbelow. Industry profile ratios based on the StandardIndustrial Classification (SIC) code 4725, TourOperators, are shown for comparison.

Ratio Analysis

Year 1 Year 2 Year 3 Industry

$60,000 $60,000 $60,000


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Profile

Sales Growth 0.00% 60.00% 16.67% 4.00%

Percent ofTotal Assets

Other CurrentAssets

0.00% 0.00% 0.00% 42.80%

Total CurrentAssets

92.60% 98.52% 100.00% 65.80%

Long-termAssets

7.40% 1.48% 0.00% 34.20%

Total Assets 100.00% 100.00% 100.00% 100.00%

CurrentLiabilities

3.48% 7.39% 5.22% 33.10%

Long-termLiabilities

0.00% 0.00% 0.00% 16.40%

TotalLiabilities

3.48% 7.39% 5.22% 49.50%

Net Worth 96.52% 92.61% 94.78% 50.50%

Percent ofSales

Sales 100.00% 100.00% 100.00% 100.00%

Gross Margin 88.67% 87.50% 87.32% 40.10%

Selling,General &AdministrativeExpenses

79.51% 71.08% 70.16% 30.80%

AdvertisingExpenses

0.00% 0.00% 0.00% 0.80%

Profit BeforeInterest andTaxes

12.21% 21.90% 22.88% 1.20%

Main Ratios

Current 26.58 13.32 19.15 1.66

Quick 26.58 13.32 19.15 1.29

Total Debt toTotal Assets

3.48% 7.39% 5.22% 49.50%

Pre-tax Returnon Net Worth

64.81% 77.66% 55.48% 2.70%

Pre-tax Returnon Assets

62.56% 71.91% 52.58% 5.30%

AdditionalRatios


Net ProfitMargin

9.24% 16.42% 17.06% n.a

Return onEquity

49.05% 58.24% 41.38% n.a

ActivityRatios

AccountsPayableTurnover

42.21 12.17 12.17 n.a

Payment Days 33 18 28 n.a


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Total AssetTurnover

5.12 3.28 2.30 n.a

Debt Ratios

Debt to NetWorth

0.04 0.08 0.06 n.a

Current Liab.

to Liab.1.00 1.00 1.00 n.a

LiquidityRatios

Net WorkingCapital

$104,375 $266,370 $461,798 n.a

InterestCoverage

0.00 0.00 0.00 n.a

AdditionalRatios

Assets to Sales 0.20 0.30 0.44 n.a

CurrentDebt/TotalAssets

3% 7% 5% n.a

Acid Test 26.58 13.32 19.15 n.a

Sales/NetWorth

5.31 3.55 2.43 n.a

DividendPayout

0.00 0.00 0.00 n.a

Paid-in Capital

Retained Earnings ($2,400) $53,043 $210,706

Earnings $55,443 $157,664 $191,096

Total Capital $113,043 $270,706 $461,802

Total Liabilities and Capital $117,123 $292,323 $487,247

Net Worth $113,043 $270,706 $461,802


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Appendix

Sales Forecast

Month1

Month2

Month3

Month4

Month5

Month 6Month

7Month 8 Month 9

Month10

Month11

Month12

Sales

Heli-skiing 0% $0 $0 $0 $0 $0 $120,000 $0 $0 $120,000 $120,000 $0 $0

White-water Rafting 0% $0 $0 $0 $0 $0 $0 $0 $70,000 $0 $70,000 $0 $0

Mountain Biking 0% $0 $0 $0 $0 $0 $0 $50,000 $50,000 $0 $0 $0 $0

Other 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Sales $0 $0 $0 $0 $0 $120,000 $50,000 $120,000 $120,000 $190,000 $0 $0

Direct Cost of SalesMonth

1Month

2Month

3Month

4Month

5Month 6

Month7

Month 8 Month 9Month

10Month

11Month

12

Heli-skiing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

White-water Rafting $0 $0 $0 $0 $0 $0 $0 $20,000 $0 $20,000 $0 $0

Mountain Biking $0 $0 $0 $0 $0 $0 $14,000 $14,000 $0 $0 $0 $0

Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Direct Costof Sales

$0 $0 $0 $0 $0 $0 $14,000 $34,000 $0 $20,000 $0 $0

Personnel Plan

Month1

Month2

Month3

Month4

Month5

Month6

Month7

Month8

Month9

Month10

Month11

Month12

Thomas 0% $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500

John Weis 0% $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500

Lourdes 0% $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500

Mountain Bike TripPersonnel

0% $0 $0 $0 $0 $0 $0 $35,000 $35,000 $0 $0 $0 $0

Heli-skiing Personnel 0% $0 $0 $0 $0 $0 $40,000 $0 $0 $40,000 $40,000 $0 $0

White-waterAdventure Personnel

0% $0 $0 $0 $0 $0 $0 $0 $35,000 $0 $35,000 $0 $0

Secretary 0% $0 $0 $0 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000

Total People 3 3 3 4 4 9 9 14 9 14 4 4

Total Payroll $7,500 $7,500 $7,500 $9,500 $9,500 $49,500 $44,500 $79,500 $49,500 $84,500 $9,500 $9,500

General Assumptions

Month1

Month2

Month3

Month4

Month5

Month6

Month7

Month8

Month9

Month10

Month11

Month12

Plan Month 1 2 3 4 5 6 7 8 9 10 11 12

CurrentInterest Rate

10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%

Long-term 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%


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Interest Rate

Tax Rate 30.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00%

Other 0 0 0 0 0 0 0 0 0 0 0 0

Pro Forma Profit and Loss

Month

1

Month

2

Month

3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9

Month

10

Month

11

Month

12

Sales $0 $0 $0 $0 $0$120,000

$50,000$120,000

$120,000

$190,000

$0 $0

Direct Costof Sales

$0 $0 $0 $0 $0 $0 $14,000 $34,000 $0 $20,000 $0 $0

Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Costof Sales

$0 $0 $0 $0 $0 $0 $14,000 $34,000 $0 $20,000 $0 $0

GrossMargin

$0 $0 $0 $0 $0$120,000

$36,000 $86,000$120,000

$170,000

$0 $0

GrossMargin %

0.00% 0.00% 0.00% 0.00% 0.00%100.00%

72.00% 71.67%100.00%

89.47% 0.00% 0.00%

Expenses

Payroll $7,500 $7,500 $7,500 $9,500 $9,500 $49,500 $44,500 $79,500 $49,500 $84,500 $9,500 $9,500

Sales andMarketingand OtherExpenses

$0 $0 $0 $0 $0 $5,000 $1,500 $3,000 $5,000 $6,500 $0 $0

Depreciation

$361 $361 $361 $361 $361 $361 $361 $361 $361 $361 $361 $361

LeasedEquipment

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Utilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Insurance $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400

Rent $450 $450 $450 $450 $450 $450 $450 $450 $450 $450 $450 $450

PayrollTaxes

15%

$1,125 $1,125 $1,125 $1,425 $1,425 $7,425 $6,675 $11,925 $7,425 $12,675 $1,425 $1,425

Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

TotalOperatingExpenses

$9,836 $9,836 $9,836 $12,136 $12,136 $63,136 $53,886 $95,636 $63,136$104,886

$12,136 $12,136

ProfitBeforeInterest andTaxes

($9,836)

($9,836)

($9,836)

($12,136)

($12,136)

$56,864($17,886)

($9,636) $56,864 $65,114($12,136)

($12,136)

EBITDA($9,475)

($9,475)

($9,475)

($11,775)

($11,775)

$57,225($17,525)

($9,275) $57,225 $65,475($11,775)

($11,775)

Interest

Expense

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

TaxesIncurred

($2,951)

($2,459)

($2,459)

($3,034) ($3,034) $14,216 ($4,472) ($2,409) $14,216 $16,279 ($3,034) ($3,034)

Net Profit($6,885)

($7,377)

($7,377)

($9,102) ($9,102) $42,648($13,415)

($7,227) $42,648 $48,836 ($9,102) ($9,102)

NetProfit/Sales

0.00% 0.00% 0.00% 0.00% 0.00% 35.54% -26.83% -6.02% 35.54% 25.70% 0.00% 0.00%


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Pro Forma Cash Flow

Month1

Month2

Month3


6Month 7 Month 8

Month9

Month10

Month11

Month12

CashReceived

Cash from

Operations

Cash Sales $0 $0 $0 $0 $0$120,000

$50,000$120,000

$120,000

$190,000

$0 $0

SubtotalCash fromOperations

$0 $0 $0 $0 $0$120,000

$50,000$120,000

$120,000

$190,000

$0 $0

AdditionalCashReceived

Sales Tax,VAT,HST/GSTReceived

0.00%

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New CurrentBorrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New OtherLiabilities(interest-free)

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Long-termLiabilities

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales ofOtherCurrentAssets

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales of

Long-termAssets

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

NewInvestmentReceived

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

SubtotalCashReceived

$0 $0 $0 $0 $0$120,000

$50,000$120,000

$120,000

$190,000

$0 $0

ExpendituresMonth

1Month

2Month

3Month 4 Month 5

Month6


9Month

10Month

11Month

12

ExpendituresfromOperations

CashSpending $7,500 $7,500 $7,500 $9,500 $9,500 $49,500 $44,500 $79,500 $49,500 $84,500 $9,500 $9,500

BillPayments

($976)($1,427)

($952) ($1,227) ($1,493) $183 $27,193 $19,514 $46,704 $28,451 $53,668($1,493)

SubtotalSpent onOperations

$6,524 $6,073 $6,548 $8,273 $8,007$49,683

$71,693 $99,014 $96,204$112,951

$63,168 $8,007

AdditionalCash Spent


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Sales Tax,VAT,HST/GSTPaid Out

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

PrincipalRepaymentof Current

Borrowing

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

OtherLiabilitiesPrincipalRepayment

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Long-termLiabilitiesPrincipalRepayment

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

PurchaseOtherCurrentAssets

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

PurchaseLong-termAssets

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

SubtotalCash Spent

$6,524 $6,073 $6,548 $8,273 $8,007$49,683

$71,693 $99,014 $96,204$112,951

$63,168 $8,007

Net CashFlow

($6,524)

($6,073)

($6,548) ($8,273) ($8,007)$70,317

($21,693)

$20,986 $23,797 $77,049($63,168)

($8,007)

CashBalance

$38,076

$32,003 $25,455 $17,182 $9,175$79,492

$57,799 $78,785$102,581

$179,630

$116,462

$108,455

Pro Forma Balance Sheet

Month1

Month2

Month3

Month4

Month5

Month6

Month7

Month8

Month9

Month10

Month11

Month12

AssetsStartingBalances

CurrentAssets

Cash $44,600$38,076

$32,003 $25,455 $17,182 $9,175$79,492

$57,799 $78,785$102,581

$179,630

$116,462

$108,455

OtherCurrentAssets

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

TotalCurrentAssets

$44,600$38,076

$32,003 $25,455 $17,182 $9,175$79,492

$57,799 $78,785$102,581

$179,630

$116,462

$108,455

Long-termAssets

Long-termAssets

$13,000$13,000

$13,000 $13,000 $13,000 $13,000$13,000

$13,000 $13,000$13,000

$13,000

$13,000 $13,000

AccumulatedDepreciation

$0 $361 $722 $1,083 $1,444 $1,805 $2,166 $2,527 $2,888 $3,249 $3,610 $3,971 $4,332

Total $13,000 $12,63 $12,278 $11,917 $11,556 $11,195 $10,83 $10,473 $10,112 $9,751 $9,390 $9,029 $8,668


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Long-termAssets

9 4

TotalAssets

$57,600$50,715

$44,281 $37,372 $28,738 $20,370$90,326

$68,272 $88,897$112,332

$189,020

$125,491

$117,123

LiabilitiesandCapital

Month1

Month2

Month3

Month4

Month5

Month6

Month7

Month8

Month9

Month10

Month11

Month12

CurrentLiabilities

AccountsPayable

$0 $0 $943 $1,411 $1,879 $2,613$29,921

$21,281 $49,134$29,921

$57,773

$3,346 $4,080

CurrentBorrowing

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

OtherCurrentLiabilities

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

SubtotalCurrentLiabilities

$0 $0 $943 $1,411 $1,879 $2,613$29,921

$21,281 $49,134$29,921

$57,773

$3,346 $4,080

Long-termLiabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

TotalLiabilities

$0 $0 $943 $1,411 $1,879 $2,613$29,921

$21,281 $49,134$29,921

$57,773

$3,346 $4,080

Paid-inCapital

$60,000$60,000

$60,000 $60,000 $60,000 $60,000$60,000

$60,000 $60,000$60,000

$60,000

$60,000 $60,000

RetainedEarnings

($2,400)($2,400)

($2,400)

($2,400)

($2,400)

($2,400)

($2,400)

($2,400)

($2,400)

($2,400)

($2,400)

($2,400)

($2,400)

Earnings $0($6,885)

($14,262)

($21,639)

($30,741)

($39,843)

$2,805($10,610)

($17,837)

$24,811

$73,647

$64,545 $55,443

TotalCapital

$57,600$50,715

$43,338 $35,961 $26,859 $17,757$60,405

$46,990 $39,763$82,411

$131,247

$122,145

$113,043

TotalLiabilitiesandCapital

$57,600$50,715 $44,281 $37,372 $28,738 $20,370

$90,326 $68,272 $88,897

$112,332

$189,020

$125,491

$117,123

Net Worth $57,600$50,715

$43,338 $35,961 $26,859 $17,757$60,405

$46,990 $39,763$82,411

$131,247

$122,145

$113,043

Khaairuridian Bandung Assignment

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